Cabinet
Okays proposal for 49% FDI in pension & insurance firms

The Congress-led UPA
government has unveiled a second wave of reforms, approving proposals allowing
foreign investors to own up to 49% in insurance firms and pension funds.

But the initiative may
remain still born as BJP, the principal Opposition party, signalled its
reluctance to back bills raising foreign investment limits.

Two other less
contentious economic legislation one modernising the Companies Act and
another, the forward contracts bill, empowering the regulator of commodities
markets may fare better in Parliament.

Addressing a press
conference on Thursday evening, Finance Minister P Chidambaram said the
government will reach out to the Opposition parties. "I'm optimistic that
the principal Opposition party will support. We should not jump to conclusions.
Legislation-making process involves discussion and negotiation. There have been
instances where a government that did not have absolute majority has got bills
passed," he said, underscoring the difficulty the government faces.

"BJP will expand
the fine print on the two bills. It stands committed to protect the interest of
pensioners," BJP Spokesman Ravi Shankar Prasad said.

The standing committee
on finance headed by Yashwant Sinha, a former finance minister in the NDA
government, had proposed capping FDI at 26% in insurance and pension.

The government also
approved the 12th Five-Year Plan and announced measures to operationalise
infrastructure debt funds after a marathon cabinet meeting that deliberated on
21 items and seemed intended to convey a sense of purpose and determination
after the policy paralysis that had characterised the first three years of
UPA's second term in office.

The government will need
the support of the Samajwadi Party (SP) and Bahujan Samaj Party (BSP) to ensure
the passage of the insurance and pension bills.